Question 1

Markets in which the Herfindahl-Hirschman Index ________ are considered not concentrated.

Accepted Answer

A)   is less than 1,000
B)   is between 1,800 and 2,000
C)   is between 1,000 and 1,800
D)   is above 2,000E) C) and D)
F) A) and B)

Question 2

U.S.Code Title 18 § 1696 states
Whoever establishes any private express for the conveyance of letters or packets,or in any manner causes or provides for the conveyance of the same by regular trips or at stated periods over any post route which is or may be established by law,or from any city,town,or place to any other city,town,or place,between which the mail is regularly carried,shall be fined not more than $500 or imprisoned not more than six months,or both.
The Code of Federal Regulation (CFR) Title 39 Section 310.2 states
It is generally unlawful under the Private Express Statutes for any person other than the Postal Service in any manner to send or carry a letter on a post route or in any manner to cause or assist such activity.Violation may result in injunction,fine or imprisonment or both and payment of postage lost as a result of the illegal activity.
Under these laws,the U.S.Postal Service ________.

Accepted Answer

A)   has a monopoly power over private express mail
B)   has a comparative advantage over private express mail
C)   competes in an oligopoly market for private express mail
D)   competes in a monopolistic competition against other private express mail carriersE) A) and B)
F) B) and C)

Question 3

The entry of new firms into a market will ________ if the market power of the existing firms is small.

Accepted Answer

A)   reduce the market price
B)   increase the market price
C)   not change the market price
D)   first reduce, and then increase the market priceE) B) and C)
F) A) and D)

Question 4

Which of the following firms is likely to have the highest market power?

Accepted Answer

A)   A perfectly competitive firm
B)   A monopolistic competitor
C)   A monopolistic firm
D)   An oligopolistic firm with homogeneous productsE) C) and D)
F) A) and B)

Question 5

Oligopolists merge to ________.

Accepted Answer

A)   increase market supply
B)   increase market demand
C)   increase market power
D)   reduce pricesE) None of the above
F) B) and D)

Question 6

The market outcome in a duopoly with homogeneous products is similar to that in ________.

Accepted Answer

A)   a perfectly competitive market
B)   a monopolistically competitive market
C)   a monopoly
D)   an oligopoly with differentiated productsE) A) and B)
F) A) and C)

Question 7

When is the Department of Justice less likely to allow a merger?

Accepted Answer

The Department of Justice (DOJ)reviews m...

Question 8

Consider the following table.Which option correctly fills the blanks in the table?

Accepted Answer

A)   1 = wheat; 2 = clothing; 3 = cars; 4 = patented drugs
B)   1 = tomatoes; 2 = wireless providers; 3 = breakfast cereal; 4 = electricity
C)   1 = bread; 2 = bottled water; 3 = chocolate bars; 4 = tap water
D)   1 = soft drinks; 2 = wine; 3 = laptop computers; 4 = aircraftE) A) and D)
F) None of the above

Question 9

A ________ is a formal organization of producers who agree on anticompetitive actions.

Accepted Answer

A)   duopoly
B)   cartel
C)   monopoly
D)   partnershipE) A) and B)
F) C) and D)

Question 10

Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit.If the average total cost of producing 2,000 units of the good is $6,what is the total profit earned by the producer?

Accepted Answer

A)   $8,000
B)   $4,000
C)   $2,000
D)   $20,000E) A) and B)
F) A) and C)

Question 11

Scenario: Suppose there are only two firms in an industry, and their products are perfect substitutes for each other. Each firm had a fixed marginal cost of $5 and zero fixed cost of operation. The highest the consumers of this product are willing to pay for it is $10, and there are 200 consumers in this market.
-Refer to the scenario above.Suppose Firm 1 and Firm 2 have to come up with a pricing strategy simultaneously.In this case,Firm 1 will charge ________,and firm 2 will charge ________.

Accepted Answer

A)   $10; $10
B)   $10; $5
C)   $5; $10
D)   $5; $5E) A) and B)
F) A) and C)

Question 12

Which of the following is true of the long-run equilibrium price in a monopolistically competitive market?

Accepted Answer

A)   It is equal to the average total cost of production.
B)   It is less than the average total cost of production.
C)   It is higher than the average total cost of production.
D)   It is lower than the marginal cost of production.E) B) and C)
F) A) and B)

Question 13

Which of the following is true when a Nash equilibrium is reached in a duopoly with homogeneous products?

Accepted Answer

A)   Both firms earn positive economic profits.
B)   Each firm charges a price equal to its average fixed cost.
C)   Both firms earn zero economic profits.
D)   Both firms incur huge losses.E) C) and D)
F) None of the above

Question 14

Collusion among oligopolistic firms leading to a higher market price ________.

Accepted Answer

A)   is an effective agreement because it is a legal contract
B)   results in market efficiency
C)   gives rise to cheating incentives
D)   maximizes social surplusE) B) and C)
F) All of the above

Question 15

The following figure depicts four different market situations.
 
-Refer to the figure above.Which of the four market situations depicts a monopolistically competitive firm making negative profits?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and D)
F) B) and D)

Question 16

Which of the following is an example of a monopolistically competitive market?

Accepted Answer

A)   The market for wheat
B)   The market for coffee beans
C)   The market for shampoo
D)   The market for premium carsE) A) and B)
F) A) and C)

Question 17

Which of the following market structures has the highest market concentration?

Accepted Answer

A)   A monopoly
B)   An oligopoly with differentiated products
C)   Perfect competition
D)   Monopolistic competitionE) All of the above
F) B) and C)

Question 18

A collusion breaks down if ________.

Accepted Answer

A)   a firm charges a higher price than the price set by the other colluding firms
B)   a firm charges a lower price than the price set by the other colluding firms
C)   the price set by the colluding firms equals the marginal cost of production
D)   the price set by the colluding firms exceeds the marginal cost of productionE) None of the above
F) All of the above

Question 19

There are a few firms in the automobile industry in Zadmia.To prevent a price war,these firms have secretly agreed to charge a price 20 percent above the marginal cost of production.This is an example of ________.

Accepted Answer

A)   free riding
B)   undercutting
C)   collusion
D)   cost cuttingE) A) and B)
F) B) and C)

Question 20

Differentiate between the four market structures on the basis of the type of products sold.

Accepted Answer

Perfect competitors sell homogeneous pro...

Exam 14: Oligopoly and Monopolistic Competition

Differentiate between the four market structures on the basis of the type of products sold.

Correct Answer
verified
Perfect competitors sell homogeneous pro...
View Answer

Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit.If the average total cost of producing 2,000 units of the good is $6,what is the total profit earned by the producer?

Correct Answer
verified

Oligopolists merge to ________.

Correct Answer
verified

The market outcome in a duopoly with homogeneous products is similar to that in ________.

Correct Answer
verified

Which of the following market structures has the highest market concentration?

Correct Answer
verified

The following figure depicts four different market situations. -Refer to the figure above.Which of the four market situations depicts a monopolistically competitive firm making negative profits?

Correct Answer
verified

A ________ is a formal organization of producers who agree on anticompetitive actions.

Correct Answer
verified

Which of the following is true when a Nash equilibrium is reached in a duopoly with homogeneous products?

Correct Answer
verified

Which of the following is an example of a monopolistically competitive market?

Correct Answer
verified

The entry of new firms into a market will ________ if the market power of the existing firms is small.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Collusion among oligopolistic firms leading to a higher market price ________.

Correct Answer
verified

There are a few firms in the automobile industry in Zadmia.To prevent a price war,these firms have secretly agreed to charge a price 20 percent above the marginal cost of production.This is an example of ________.

Correct Answer
verified

Consider the following table.Which option correctly fills the blanks in the table?

Correct Answer
verified

Which of the following firms is likely to have the highest market power?

Correct Answer
verified

A collusion breaks down if ________.

Correct Answer
verified

When is the Department of Justice less likely to allow a merger?

Correct Answer
verified
The Department of Justice (DOJ)reviews m...
View Answer

Markets in which the Herfindahl-Hirschman Index ________ are considered not concentrated.

Correct Answer
verified

Which of the following is true of the long-run equilibrium price in a monopolistically competitive market?

Correct Answer
verified

Exam 14: Oligopoly and Monopolistic Competition

Differentiate between the four market structures on the basis of the type of products sold.

Correct AnswerverifiedPerfect competitors sell homogeneous pro...View AnswerShow Answer

Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit.If the average total cost of producing 2,000 units of the good is $6,what is the total profit earned by the producer?

Correct AnswerverifiedShow Answer

Oligopolists merge to ________.

Correct AnswerverifiedShow Answer

The market outcome in a duopoly with homogeneous products is similar to that in ________.

Correct AnswerverifiedShow Answer

Which of the following market structures has the highest market concentration?

Correct AnswerverifiedShow Answer

The following figure depicts four different market situations. -Refer to the figure above.Which of the four market situations depicts a monopolistically competitive firm making negative profits?

Correct AnswerverifiedShow Answer

A ________ is a formal organization of producers who agree on anticompetitive actions.

Correct AnswerverifiedShow Answer

Which of the following is true when a Nash equilibrium is reached in a duopoly with homogeneous products?

Correct AnswerverifiedShow Answer

Which of the following is an example of a monopolistically competitive market?

Correct AnswerverifiedShow Answer

The entry of new firms into a market will ________ if the market power of the existing firms is small.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Collusion among oligopolistic firms leading to a higher market price ________.

Correct AnswerverifiedShow Answer

There are a few firms in the automobile industry in Zadmia.To prevent a price war,these firms have secretly agreed to charge a price 20 percent above the marginal cost of production.This is an example of ________.

Correct AnswerverifiedShow Answer

Consider the following table.Which option correctly fills the blanks in the table?

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the highest market power?

Correct AnswerverifiedShow Answer

A collusion breaks down if ________.

Correct AnswerverifiedShow Answer

When is the Department of Justice less likely to allow a merger?

Correct AnswerverifiedThe Department of Justice (DOJ)reviews m...View AnswerShow Answer

Markets in which the Herfindahl-Hirschman Index ________ are considered not concentrated.

Correct AnswerverifiedShow Answer

Which of the following is true of the long-run equilibrium price in a monopolistically competitive market?

Correct AnswerverifiedShow Answer

Correct Answer
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Perfect competitors sell homogeneous pro...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
The Department of Justice (DOJ)reviews m...
View Answer

Correct Answer
verified

Correct Answer
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